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LAS AMERICAS A Victory in the Agua Wars BY GABRIELA BOCAGRANDE D ue west of Bogota, in the bosom of Colombia’s coffee country, sits the city of Pereira, the Pearl of the Otun River Basin. Pereira is nestled into the crossfire between narcotrafficking paramilitaries on retainer for the coffee barons and narcotrafficking guerrillas intermittently making revolution and money by kidnapping rich people. Like much of Colombia, the city suffers from occasional volcanic eruptions and the intrusive attentions of the Inter-American Development Bank tion based in Washington that is largely responsible for dragging Latin America into a 21st century heavily encumbered by poverty, joblessness and debt. The IDB has been active in Pereira lately, assisting the city with large-scale improvements in water and sewerage services, all of which cost multiple millions of dollars that local authorities have borrowed from the IDB. As usual, there is an unsettling twist in this “development” chronicle: By most accounts, the public services in Pereira were doing all right before they attracted the multi-millions of the IDB. Until 1997, water service was provided a public utility that also supplied telephone, electricity and waste services. Like other municipal enterprises in Colombia, the EEPP operated on the basis of “cross subsidies,” established so that the rates paid by the users of telecommunications, also covered the costs of providing basic services, such as water, to those who could not pay. But just as the World Bank and the International Monetary Fund abhor a subsidy, so too does the IDB. A technical report from the Bank charged that the surplus revenues produced by tele phone service allowed the company to “hide financial deficits for water supply and sewerage.” So what’s wrong with that, we ask. “Surplus” revenues of all sorts also fund the Army, for example, which is not a profitable enterprise, either. And more surplus revenues pay the mortgage on the presidential palace and the monthly payments for all those bullet-proof limos, plus whatever is due for the boatloads of recently-acquired Blackhawks. But never mind; poor people must somehow pay for their own water or they’re not going to get any, say the development economists. In response to IDB policy recommendations, then, the Colombian government separated the multi-service EEPP into its distinct functions, producing the new standalone water company, Aguas de Pereira subsidies, was instantly broke. Now why in the world would a clever Banker do an apparently dumb thing like that? Let’s look at the workings of the water company, shall we, and see if we can’t figure it out. Two things made EEPP appealing to the IDB and its innovative corporate sponsors. First, EEPP’s water and sanitation coverage was very good: Virtually 100 percent of the city’s population had access to clean drinking water through the public system and over 90 percent had access to basic sanitation services. And second, much of the water provided to the poor and the near-poor was unmetered and unbilled. Until the arrival of the international development banks, Colombia’s public enterprises, in general, tolerated the distribution of un-metered water in poor urban neighborhoods and in many rural areas because universal access to clean water was necessary for public health reasons. The installation of water meters for consumption was therefore not a basic priority, nor were exact billing practices. So here’s a sizable water company with comprehensive tubes and taps, a good service record, about 40 percent of its water unbilled, little debt and a large concentrated, captive clientele. If, as an enterprising businessperson, you could arrange for yourself to own such a company, you could install meters, where needed, and simply start scooping up money. It’s as easy as turning on the tap. And if, as an even more enterprising businessperson, you could arrange for the city to borrow the money to install the meters for you, you could scoop up even more money. After that, you could raise water rates. Who’s going to stop you? But if you’re going to own the company, you’re going to have to get the city to sell it no? And how better to force the city to sell than to make the company appear to be bankrupt? After the IDB got through with it, that is exactly how AAP stood. The IDB imposed “reforms” on the city’s public services that produced a water company that could not sustain itself and that created the conditions to justify the capitalization of the company through private investment. Next, the IDB appeared on the horizon with a loan of $61 million for AAP, available on the condition that the company be privatized. The many millions would fund the establishment of commercial and financial operating conditions at AAP; a private sector bidding and contracting process for the construction and operation of a waste water treatment plant; an increase in the metering of water distribution; access to water in new housing and in marginal neighborhoods as needed, and improved sanitation. These last two operations would be paid for, largely, by the poor themselves: They would 16 THE TEXAS OBSERVER 2/27/04